Correlation Between Investec and Barloworld
Can any of the company-specific risk be diversified away by investing in both Investec and Barloworld at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Investec and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Group and Barloworld Ltd ADR, you can compare the effects of market volatilities on Investec and Barloworld and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Investec with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec and Barloworld.
Diversification Opportunities for Investec and Barloworld
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investec and Barloworld is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Investec Group and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Investec is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Investec Group are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Investec i.e., Investec and Barloworld go up and down completely randomly.
Pair Corralation between Investec and Barloworld
Assuming the 90 days horizon Investec is expected to generate 10.25 times less return on investment than Barloworld. But when comparing it to its historical volatility, Investec Group is 9.47 times less risky than Barloworld. It trades about 0.21 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 423.00 in Barloworld Ltd ADR on September 20, 2024 and sell it today you would earn a total of 167.00 from holding Barloworld Ltd ADR or generate 39.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Investec Group vs. Barloworld Ltd ADR
Performance |
| Timeline |
| Investec Group |
| Barloworld ADR |
Investec and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec and Barloworld
The main advantage of trading using opposite Investec and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec position performs unexpectedly, Barloworld can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Barloworld will offset losses from the drop in Barloworld's long position.| Investec vs. SPENN Technology AS | Investec vs. OFX Group Ltd | Investec vs. HUMANA INC | Investec vs. Barloworld Ltd ADR |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |